### ENERGY SAVINGS THROUGH INCREASED FUEL ECONOMY FOR HEAVY-DUTY TRUCKS

P REPARED FOR THE N ATIONAL C OMMISSION ON E NERGY P OLICY

Therese Langer American Council for an Energy-Efficient Economy February 11, 2004ENE R GY S AVINGS T H ROUGH INCR EAS E D FUEL ECONOMY FOR HE AVYDUT Y TRUCKS

Su mm ary

Seven percent of energy consum ed in the U.S., and 30% of consum ption in the transportation sector, is for the m ovem e nt of freight. W h ile trucks m ove less than half of all f r e i ght to n-m iles, the y are th e pre f erre d m ode for short-to-m edium distance, tim e

sensitive goods. Trucks move the bulk of all freight value, and thei r share is increasing. Trucking is energy-intensive and accounts for 60% of frei ght energy use, consum ing 2.3

m illion barrels of oil per day in 2000 . Hence trucks are an importan t place to look for

energy sav i n g s in the tra n sporta tion sect or. Opportunities to reduce trucks’ energy

consum ption include both technological im provem e nts and advances in system s and logistics. This report considers only the pot ential for vehicle tec hnologies to raise truck fuel economy.

There are fewer than th ree m illion medi um and heavy tru c ks (those over 10,000 pounds gross vehicle weight) on U.S. roads, and a nnual sales are about one percent of passenger vehicle sales. Sales of individual m o dels num be r in the hundreds or thousands, in contrast to the tens or hundreds of thousands for car m ode ls. Truck production is also m o re modular; engines typically are m a nufactured by di esel engine com p anies, then integrated into a vehicle m eeting the specifications of the custom er and, in m a ny cases, m a tched with a trailer. Trucks m u st m eet federal po llution em ission standards, but they are not subject to fuel econom y requirem e nts. Like passenger vehicles, heavy trucks are produced by a handful of com p anies in the U.S., Europe and Asia.

While truck users are m o re affected than pa ssenger vehicle users by fuel expenses, the dem a nd for fuel economy is not sufficient to bring all cost-e ffective efficiency technologies into the m a rket. Manufacturer ri sk, low fuel prices, lack of fuel econom y inform ation on individual m odels, and undervaluation of fuel econom y all lim it the introduction of better technologies.

This report estim ates the energy savings th at could be achieved through cost-effective technology improvem e nt s to heavy-duty trucks in the near future and explores candidate policies to realize these savings. The technol ogies considered are sim ilar to those in DOE’s 21 st Century Truck Roadm a p, but that do cum e nt contains no cost inform ation. The savings and cost estim a tes in this repor t are based largely on two papers by Argonne National Laboratory researchers, one for tec hnologies applicable to tractor-trailers and the other for hybrid technologies for short-haul trucks. The firs t of these papers has also been used extensively by the Energy Info rm ation Adm i nistration in forecasting heavyduty truck energy use in the U.S.

Our m e thodology for estim a ting the total fuel econom y gain achievable is modeled on the approach used by the National Academy of Sc iences CAFÉ panel in its as sessm ent of cars and light trucks in 2001. Truck data thr oughout this report ar e derived from the 1997 Vehicle Inventory and Use St udy of the U.S. Census Bureau unless otherwise noted.

1Findings

Tractor-trailers are the big fuel users am ong medium and heavy trucks, consum ing twothirds of all truck fuel, o r 1.5 m illion barrels per day. Substan tial im provem e nts could be

m a de to their fuel economy through a vari ety of existing and em erging technologies, including engine im provem e nts, transm i ssion enhancem ents, and weight reduction: average fuel econom y for new tr actor-trailers could be rais ed by 29% starting in 2008 and by 58% in 2015, while providing net savings fo r the owner based on increm ental cost and lifetim e fuel savings.

Introducing fuel economy standards for heavy-du ty vehicles could he lp to realize these potential efficien cy gain s. St andards would present a techni ca l challenge in that they would require a fuel econom y test protocol fo r vehicles that vary widely in aerodynam i cs, load, and drive cycle. Bu t tracto r-trailers are m o re uniform in these reg a rds than the res t of the fleet, and m eaningful standards for th ese trucks could be set. Alternatively, a standard for CO 2 production for the engine alone c ould be combined with technology standards for vehicle components.

For trucks o t her than tractor-trailers, hybrid techn o logies are p r om ising, because a larg e fraction of m iles driven by these tru c ks are local and under s t op-and-go conditions. Hybridization could alm o st double f u el econom y for Class 3-5 trucks and raise C l ass 6-7 fuel economy by 71% in city d r iving, at co s t s that will decline rapid l y in the com i ng years. For over half of all trucks in cla sses 3

- 6 an d straight tr ucks in Classes 7-8, hybridization could bring m odest lif etim e savings starting in the near future and savings of several thousand dollars for vehicles purchased in 2015 and beyond. Conventional fuel

econom y i m provem e nt technologies sim ilar to th ose considered for tr actor-trailers could be applicable to these vehicles as well, but , in combination w ith hybridization, they are far less likely to be cost-effective, because th e savings per percent increas e in fuel

econom y are lower when the base fuel econom y is high.

Because m a nufacturers will in cur ex penses in b r inging hybrids to m a rket, and becaus e buyers do not purchase vehicles on the ba sis of net lifetim e savings, the costeffectivenes s of hybrids will not in itself trans l ate into m a rket success, and m easures to
prom ote hybrids are needed until costs com e down. Tax incentives like those proposed in the federal energy bill could cont ribu te to this co s t reduc tio n; research and developm ent sponsored by the U.S. Departm e nt of Energy could also help.

Com b ining the cost-effective conventional im provem e nts for tractor-trailers with hybridization of short-haul trucks woul d yield a 32% reduction overall in fuel

consum ption for new trucks by 2015. Such an improvem e nt would take a decade to phase into th e entir e f r eight tru c k stock, by which tim e truck ac tivity will have g r own; but the

m a gnitude of potential savings is illu stra ted by n o ting th at a 32% reduction in freight truck fuel consum ption today would save 740,000 barrels of oil per day.

2Table S1 Cost-Effective Fuel Savings from He avy Truck Fuel Economy Improvements Available in 2015

P I C K UP TRU C K S

, SU VS, UT IL I T Y VA NS 8 500 – 1 0 ,000 LBS LOCALLY-DRIVE N TRUCKS

1 0

, 000 LBS AN D UP TRACTOR

- T R AILER S

3 3

, 000 LBS AN D UP

Poten t ial i m pro v e m en t in fu el eco no m y 33 % 7 1 – 93 % 5 8 %

Fuel U se Re duc tion as Fracti on o f T o ta l Truck Fuel U s e * 3 % 7 % 22 %

Tech nol og y C o n v e n t i onal H y bri d C o n v e n t i onal

Reco mme nde d Policies Expand C A FE to include these vehicles Tax Ince ntives

, R&D Fuel Ec o nom y St anda r d s Opt i o ns: by Ve hi cl e o r by
In di vi dual C o m ponent s (en g i n e , bo dy , et c)

Trucks in the 8500-10,000 pound we ight range are not consid ered heavy-duty, nor do they fall under existing passenger vehicle fuel econom y regulations. Th is class, which includes both commercial and personal vehi cles, largely pickup trucks, consum es 360,000 barrels of oil daily. W h ile efforts to include these vehicles under f u el econom y regulation have encountered resistance based on concerns about farm ers and others w ho need work vehicles m eeting certain perform a nce requirem e nts, substantial fuel savings could be achieved in this wei ght range with no loss of func tionality. The findings of the National Academ y of Sc iences CAFÉ panel pr ovide strong evidence that a fuel economy increase of 33% is feasible for 8500-10,000 lb. ve hicles. Applied to today’s vehicles, this would translate into savings of 90,000 barrels per day.

In summ ary, the fuel consum ption of all truc ks over 8500 lbs. could be reduced by nearly one-third, as shown in Table S1.

3 * In Ta ble S1 only, “truck fuel use” re fers to fuel c o nsum ed by al l t r uc ks o v er 8 5 0 0 l b s. E l sewhe r e, suc h ph rases re fer t o tr uc ks ove r 1 0

, 0 0 0 l b s. o n ly

.Introduction

Seven percent of energy consum ed in the U.S., and 30% of consum ption in the transportation sector, is for the m ovem e nt of freight (Figure 1). W h ile trucks m ove less than half of all freight ton-m iles, they are the preferred m ode for short-to-m edium distance, time-sensitive goods. Trucks m ove th e bulk of all freight value, and their share is increasing. It is an ener gy-intensive m ode and accounts fo r 60% of freight energy use,

consum ing 2.3 m illion barrels of oi l per day in 2 000 (Davis 2003).

Figure 1 U.S. Trans p ortation S ector Energy Use in 2000

Pass en g e r

65% Tru c k 18 % Ai r 2% Rail 2%

Wa t e r 5%

Pi pel ine

3% Ot her 30% Ot h e r 5%

D a ta so ur ce: Dav i s 2 003

Hence trucks are an im portan t place to look for energy sa vings in the transportation sector. Opportunities to reduce trucks’ en ergy consum ption include both technological im prove m e nts and advances in system s and logi stics. Th is re port cons ide r s the po tential to raise truck fuel economy th rough vehicle technologies only.

There are fewer than th ree m illion medi um and heavy tru c ks (those over 10,000 pounds gross vehicle weight) on U.S. roads, and a nnual sales are under one percent of passenger vehicle sales. Sales of individual m o dels num be r in the hundreds or thousands, in contrast to the tens or hundreds of thousands for car m ode ls. Truck production is also m o re modular; engines typically are m a nufactured by di esel engine com p anies, then integrated into a vehicle m eeting the specifications of the custom er and, in m a ny cases, m a tched with a trailer. Trucks m u st m eet federal po llution em ission standards, but they are not subject to fuel econom y requirem e nts. Like passenger vehicles, heavy trucks are produced by a handful of com p anies in the U.S., Europe and Asia.

Trucks fall into eight classes by gross vehi cle weight. Classes 1 and 2 (up to 10,000 lbs. gross vehicle weight) are m a de up of pic kups, SUVs, panel trucks and a variety of passenger and sm all cargo vans. Class 2 is furt her divided into passenger vehicles and Class 2b trucks (8500-10,000 lbs.) the latter co ntaining m o stly “work” pickups (typically

43/4-ton), though an increasing percentage of Class 2b consists of large SUVs and luxury pickups. Classes 3-5 (14,001-19,500 lbs.) incl ude delivery vans, walk-ins, and som e specialized vehicles such as bucket trucks. Be verage trucks, rack trucks and school buses

are exam ples of Class 6 vehicles (19,501- 26,000 lbs.). Classes 7-8 (26,001 lbs. and over) are largely tractor-trailers

, but also incl ude refuse, cem ent and dum p trucks.

Fuel costs are an im portant consideration for the trucking indust ry, so truck owners probably value fuel savings m o re than autom obile owners do. Yet the m a rket for fuel

econom y i m provem e nts has serious failings for trucks as well, as discussed below, and cost-effectiv e fuel econo my technolo g ies are not necessarily adopted as they becom e available. Indeed, while fuel economy of the sm a ller freight trucks has increased slowly over the past 25 years, fuel econom y of the en ergy-intensive tractor- trailer fleet was the

sam e in 2001 as in 1980 (Figure 2).

Figure 2 Fuel Economy of Freight Trucks, 1980-2001

4 4. 5

5 5. 5

6 6. 5

7 7. 5

8

19 80 19 85 1990 1995 2000Miles per gallon

S i n g l e

- U n i t T r u c k s , > 4 ti r e s C o m b i nat i on T r uc k s

D a ta so ur ce: Dav i s 2 003 Methodology

There is general agreem ent on the categor ies of technologies that can contribute substantia lly to ra ising tr uck fuel eco nom y, but estim ates of the potential for increases vary widely. DuLeep projected increases in freight truck fuel econom y through im proved vehicle technologies in 2015, fi nding an “expected” increase over 1990 levels of 23% and an “optim istic” increase of 33% (D uLeep 1997). A 1992 ACEEE paper found that a tractor-trailer fuel econo my in crease of 64% over current levels would be feasible (Sachs 1992). DOE’s 21 st Century Truck Program set as “t echn i cal targets” im provem e nts in fuel efficiency of 60% for large truc ks and 140% for m e dium trucks, based on “aggressive developm ent and im plem entation of technologies currently being considered

5but not yet comm ercially viable” (D OE 2000). DOE provided no cost estim ates for reach ing these targ ets, h o wever.

The discussion and analysis below of the pot en tial to increase truck fuel econom y draw heavily from two papers by Argonne National Laboratory researcher s, the findings of which are m oderate in the context of the l iterature. One of these papers (Vyas 2002) is also th e basis for the Energy Inform ation Ad m i nis t ration’s forecasts of heavy-duty truck energy use. The paper estim ates fuel econom y increases and cost s associated with existing and em erging technologies for all truck classes; we use those estim ates for som e truck classes. Vyas et al. also project m a rket share fo r each technology in the year 202 5 based on a

com b ination of considerations, including the pe rcentage of each truck class for which the estim ated fuel econom y gain is valid, the cost of the technology, th e date of introduction, and the lag tim e for adoption. These are consider ations best kept sepa rate for purposes of the pres ent analysis, so the m a rket share num bers were not adopted for this report. Instead, we used the fuel econom y es tim at es only for a relatively hom oge neous truck population that could get the full benefit of the technologies listed, nam e ly tractortrailers. W e then adopted the costs and dates of introduction fr om the paper to conduct an analysis of what suite of technologies would be cost-effective for tr actor-trailers, using an approach sim ilar to one used in the NAS CAFÉ report on light duty vehicles (NRC 2002).

The second paper we relied upon (A n 2000) eval uates benefits and costs of hybridization of heavy-duty trucks. This is the basis for m u ch of our discussion of potential fuel

econom y ga ins for short-haul trucks, com p le m e nting the tractor-tra iler analysis. To calculate cost-effectiv eness, we used the average fuel economy percentage im prove m e nt found by An et al., together with data on av erage base fuel econom y and annual m iles traveled for non-tractor-trailer trucks driven locally. Annual miles are on average close to the figure cited by An et al (14,500 m iles), but the base fuel econom y we use is substantially higher. This lead s to an underestim ate of the pe r vehicle fuel savings. On the other hand, we apply the technology to a broa der set of vehicles than seems to be

contem plated in the paper, which may resu lt in s o m e overestim ate of the effects.

Throughout this discussion, facts appeari ng without citation are derived from 1997 Vehicle Inventory and Use Survey data. Im porta nt shifts m a y have occurred since then, but this w ill rem a in the best data source fo r m a ny facts about trucks until the data from the 2002 VIUS becom e s available later this year.

Tracto r-trailers

The heaviest trucks (Classes 7 and 8, i.e. greater than 26,000 lbs.) dom inate truck energy use, accounting for 81% of the total (Figure 3) . T h ese tru c ks are th erefore particularly im portant to attem p ts to identify practical ways to im prove fue l econom y. As discussed above, Vyas et al. provide a list of technol ogies that could increas e the fuel econom y of Class 7 and 8 trucks, and the percentage ga in an d cost asso ciated with each. The applicability of these efficiency techn o logi es depends on truck type and duty cycle,

6however. In particula r , tr ucks driven at low speed s will not be nef it grea tly f r om aerodynam i c treatm ents. Furtherm ore, the cost-eff ectiveness of the technologies is related to annual m iles traveled, which tends to be low for trucks driven locally.

We therefore analyze the bene fits of the technologies onl y f o r tractor-trailers, which typically are driven long distan ces at highway speeds. Since m o st Class 7 and 8 trucks are

trac tor

- tr aile rs (and in f act tracto r

- t ra ile rs are responsible for 69% of energy consum ed by all Cla ss 3-8 trucks (Figu r e 1)), this s implifying step does not forfeit m u ch of the potential benefit due to these technologies.

Class 7and 8 vehicles that are not tractor-tr ailers are a diverse group and are discussed further in the section on s hort-haul trucks below.

Figure 3 Energy Use by Truck Type

Cl a s s 3

3% Cl a ss 4

1% Cl a ss 5

1% Cl ass 6

14% C l as s 7& 8 81% T r ac tor- trailer 69 %

Straight truc k 12%

D a ta so ur ce: Dav i s 2 003

Technologies to increase fuel economy

Technologies to raise fuel econom y considered in the Vyas analys is include engine, aerodynam i cs and transm ission im provem e nts, as well as m a ss reduction, as shown in Table 1. Noteworthy technologi es listed there include:

• Electr i c and fuel-cell au xiliaries – Com p ressors, pum p s and fans now run off the engine could be operated electrically, thr ough an integrated starter-generator, or by fuel cell. A fuel cell cou l d also operate a uxiliary s y stem s at rest stops, reducing idling tim e, but no credit for this is taken below.

• Thermal management, etc. – This encom p asses reduction of waste heat through increasing the efficiency of turbocharging, for exam ple.

• Pneumatic blowing – Aerodynam i cs can be im proved by blowing air through points on the vehicle exterior, a technique already app lied to aircraft.

7The estim ates of fuel econom y benefits are in som e cases probably conservative; electrical o r fuel cell aux iliar ies, for exam ple, could be expected to bring higher savings than shown. Other technologies considered m a y be speculative (e.g. pneum atic blow ing). On the other hand, the list om its technology op tions as well, and it is appropriate that

som e technologies still under developm ent be included, so as not to underestim a te too greatly the potential for fuel econom y im prove ment in the tim e fra m e considered here.

Table 1 Fuel Economy Technologies for Class 7 and 8 Trucks

fuel eco nomy gain year of introdu ction co st

Aerodyn a m i c s cab top defl e ctor 2.0% curre n t $750 gap clo s ing 2.5% 2005 $1,500 trailer edg e curvatu r e 1.3% 2005 $500 pneumatic b l owin g 5.0% 2010 $2,500 rolling re sist a n ce low RR tire s 3.0% 2005 $1,098

super singl e s 3.0% 2008 $1,098 pneumatic b l owin g 1.2% 2015 $500
Tran smi ssi on 2

. 0 % 2 0 0 5 $ 1

, 0 0 0 A u x i l i a r i e s electri c al au xiliaries 1.5% 2005 $500 fuel-cell auxi liarie s 6.0% 2012 $1,500
E n g i n e friction red u c tion 2.0% 2005 $500
increa se d p eak cylinde r pre s sure 4.0% 2006 $1,000 improved inj e ctors et c 6.0% 2007 $1,500
thermal man ageme n t, etc. 10.0% 2010 $2,000
vehicle ma ss 5.0% 2005 $2,000 Source: Vyas 2002

Cost-effectiveness of technology packages

As m e ntioned above, the approach to dete rm ining the cost-effective level of fuel

econom y follows the light-duty analysis in NAS CAFÉ study. Using average values for
annual m iles traveled and fuel economy, and va rious fuel prices and investm e nt payback requirem e nts, we added technologies in decl ining order of cost-effectiveness until the

m a rginal econom i c benefit turned negative. This approach is best suited to determ ining a f easible leve l f o r f u el ec onom y standards; it does not predict the behavior of purchasers, even in a perfect m a rket, because it u s es average values of importan t param e ters.

Table 2 shows the results under eight different sets of assum p tions involving fuel price, discount rate associated with fuel savings, payback period to recover higher capital costs, and deadline for technology introduction. Th e two diesel fuel prices were $1.41, the

average p r ice over th e p e riod 2000-2025 accord ing to pro j ections in E I A’s Annual

8Energy Outlook 2003, and $1.60, which adds a 19 cent-per-gallon externality cost. The two payback requirem e nt options were: 1) a fu el savings discount rate of 12% over an

average v e hicle life of 14 years, and 2 ) a discount rate of 8% over 3 years. The two technology horizons were 2008 and 2015.

Ta ble 2 Cos t an d S a vi ngs o f Incr eas e d T r ac tor

- T r ai l er Fuel E c o n om y: E i gh t S cenari o s

B a sel i n e f u el e c on om y i s 6.2 m i l e s per gal l o n Pay b ack/ discount rate Diesel price
pe r ga llon Fue l

e c onomy impro v ement Ne w miles
pe r ga llon Cos t Fue l s a v i ngs Ne t s a v i ngs

T e chnolog ies i n troduc ed i n 2 008 or e a rli e r 14 years/1 2 % $1.41 29% 8

. 0 $ 9 2 5 0 $21,3 8 1 $12,1 3 1

3 y e a r s / 8 % $ 1

. 4 1 1 8 % 7

. 3 $47 5 0 $ 7 2 1 6 $ 2 4 6 6 14 years/1 2 % $1.60 29% 8

. 0 $ 9 2 5 0 $24,2 6 2 $15,0 1 2

3 years/8% $1.60 24% 7

. 7 $ 6 7 5 0 $10,3 6 3 $36 1 3

T e chnolog ies i n troduc ed i n 2 015 or e a rli e r 14 years/1 2 % $1.41 58% 9. 8 $15,2 5 0 $ 3 4

, 5 7 6 $ 1 9

, 3 2 6

3 years/8% $1.41 31% 8

. 1 $ 6 7 5 0 $10,7 9 1 $40 4 1 14 years/1 2 % $1.60 58% 9. 8 $15,2 5 0 $ 3 9

, 2 3 6 $ 2 3

, 9 8 6

3 years/8% $1.60 35% 8

. 4 $ 8 0 0 0 $18,5 8 8 $10,5 8 8

The 14-year payback option was used in the NAS CAFÉ study on light -duty vehicles and is m eant to m a xim i ze total us er bene f it, while th e 3-year op tio n is m eant to ref l ect the payback requirem ents of a typical truck purchas er in deciding whether to invest in higher fuel economy when buying a new vehicle. This does not im ply that the fuel econom y im prove m e nts corresponding to the 3-year op tion s would actu a lly m a terialize in the

current m a rket, however. Lack of fuel econom y inform ation on vehicles at the tim e of sale, the m a nufacturers’ risks in investi ng in new technology, the possibility that

m a nufacturers could apply the sam e technol ogies to perform a nce im provem e nts m o re

m a rketable than fuel eco nom y, and the variety in trac tor

- tr ailer duty- cycles all can serve

to m a ke fuel econom y fall short, in a business- as-usual scenario, of the level predicted by the 3-year payback analysis.

To summ arize the result of the cost-effectiv eness analys is: Us ing techno lo gies availab l e before 2008 and allowing a 14-year payback, th e cost-effective fuel econom y is 8 m i l e s per gallon, 29% above the current average. Adding technologies available by 2015, the cost-effective fuel economy ri ses to 9.8 m pg, a 58% increase over current levels. Average lifetim e savings per truck ar e considerable: increm ental vehicle costs of $15,000 and (discounted) fuel savings of $35,000 give a net savings of $20,000.

Policies to increase tractor-trailer fuel economy

The fact that the gap between highest co st-effective heavy tru c k fuel econ o m y and existing lev e ls is larg e ra ises th e ques ti on of what policies could reduce that gap. Increasing the price of fuel by the per-gallon ex ternality co st is one candidate. For the particular set of technologies used in the above analysis, an in crease of 19 cents per gallon produces little change in the cost-effective level of fuel econom y, a s Table 2

9shows. A second policy option is a fuel econom y standard f o r tracto r-trailers. The results in Table 2 indicate that a standard of 9.8 m pg phased in by 2015 would be reasonable, 1
with a baseline of 6.2 m p g for today’s fleet.

There are at present no f u el econom y standards for vehicles over 8500 lbs. in the US (or elsewhere, for that m a tter). One reason for th is is the huge variety am ong trucks, both in how they are configured and in how they are used, even with in a cl ass. Tractor-trailers are relatively hom ogeneous, however, m a king this the best category for which to consider fuel economy standards from the standpoint of feasibility, as well as fuel savings. In particular, b ecause the v a st m a jority of tract o r-trailer m iles are driv en on the highway, the problem of c hoosing an appropriate test cycl e is m u ch sim p lified. Nonetheless, there is enough variation in perf orm a nce requirem e nts for these vehicles that a single fuel

econom y standard does pose a technical challenge.

Given differences am ong trailer types, an engi ne bench test such as the one used for

em issions testing has the advantage of si m p licity. But aerodynam ics and other engineindependent features play an enorm o us role in heavy truck fuel econom y, which such a test cannot capture. Am ong th e efficiency technologies listed in Table 1, engine technolog ies account for only 40% of all po tent ial savings, so standard s based on engin e perform a nce alone could be expected to yield less than half of the achievable im prove m e nt in fuel econom y. Combining in dividual technology re quirem ents for nonengine com ponents with a bench test could recover som e of the rem a ining efficiency opportunities, but could not be expected to m a tch the results of a vehicle f u el econom y standard.

The absence of a fuel econom y testing and la beling requirem ent for hea vy trucks creates a failure in the current market, in that tr uck buyers lack the infor m ation to choose the most efficient truck. Therefore, one step toward establishm ent of a fuel econom y standard that would have value in itself would be the creation of a testing and labeling program for these veh i cles.

Short-Haul Trucks

Trucks that are not tractor-tra ilers have quite diverse duty cy cles, and th ey are us ed to a far greater extent for local trips. Indeed, 53% of all m iles driv en by trucks other than tractor-trailers are dr iven by trucks that ope rate prim arily locally, i.e. on trips of under 50

m iles. The technologies discussed above that provide efficiency gain s for tractor-trailers can apply to these sm aller tru c ks as well. Som e of the techn o logies are much less effective for trucks that generally drive at low speeds, however, and therefore have lim ited applicability. On the ot her hand, these trucks are the best candidates for hybrid technology, because local trips ty p i cally invo lve a large am ount of stop-an d-go driv ing

, which perm its extensive capture of braki ng and deceleration energy. Hybridization can offer a larger fuel efficiency gain than any other technology considered here.

1 Th ese stand a rd s i n effect assu m e th e av ailab ility o f certain l y tech no l o g i es as o f th eir date o f in tro d u c t i o n

.

10Hybrid vehicles

This section assesses the potential for hybr id technologies to provide cost-effective

energy sav i n g s. Because hybridizatio n im proves efficiency of stop-and

- go driving m o re than efficiency of highway driving, vehicles that operate largely on a city driving cycle would benefit m o st per m ile. On the other hand, m a ny urban vehicles travel

com p aratively few m iles annually, w h ich work s against speedy recovery of increm ental costs through fuel savings. The best candida tes for hybridization are trucks driven m a ny

m iles on local roads.

The percentage savings that can be expected from hybridization is very sensitive to duty cycle. For this reason, anal yses and efforts to promote hybrids often focus on narrow categories of vehicles. T h e Hybrid Truck User s ’ Forum

, for exam ple, m a de a pre lim inary selection of four types as good candidates for hybridization: Class 4-8 Specialty Trucks, includ ing utility and f i re trucks ; Clas s 4-6 urban delive r y truc ks, includ in g package a nd beverage delivery; Class 7 and 8 refuse collect ion; and Class 7 and 8 less-than-load urban delivery trucks (W estStart 2002).

Despite the specificity of hybrid gains to dut y cycle, som e quantitative statem ents about the fuel econom y i m provem e nt and cost of hybr idization can be m a de at a general level. Vyas et al., cited in the tractor-trailer discussion above , estim a te the fuel econom y advantage of a Class 4-6 hybrid-electric to be 40-70%, at a cost of $8000. The 21 st Century Truck Roadm a p sets a fuel econom y goa l of three tim e s current levels for Classes 2b and 6, of whi c h a larg e pe rcent is to c o m e f r om h ybridization; but it does not discuss co sts.

As noted above, the analysis here uses estim ates of fuel economy i m provem e nts and

costs as sociated with hy bridization from An 2000. The results of that paper are based on modeling of a Class 3-4 delivery truck and a Class 6-7 truck or bus, and evaluating the effects of hybridization over five urban dut y cycles. The average fuel econom y increase over the five cycles is 93% for the Class 3-4 truck and 71% for the Class 6-7 vehicle. T h e increm ental cost of the hybrid vehicles depe nds on the choice of technology and the year, the later being a surrogate for progress towa rds econom ies of scale and experience with the technology. The decline in cost over tim e also reflects expected increases in battery life. For purposes of this discussion, we use the least expensive option, nam e ly a parallel hybrid with a lead-acid battery, for which the cost estim ates are shown in Table 3. 2

Table 3 Estimated I n crementa l Costs of Pa rallel Hybrid-Electric Trucks

2 0 0 5 2 0 1 0 2 0 1 5 2 0 2 0

Class 3-5 $5,760 $4,472 $3,553 $3,013

Class 6-7 $7,149 $5,371 $4,090 $3,346

So urce: A n 20 00

2 Gi ve n t h at h e a v y

- dut y hy bri d t r

uc ks a r e n o t com m e rci a l l y avai l a bl e i n 2 0 0 4

, refe rences t o t h e y ear 2 0 0 5 in this secti o n shoul d be rea d as “nea r-term ”

.

11Work on hydraulic hybrids has yielded sim ilar re sults. EPA is experim e nting with a Class 6 hydraulic hybrid that achieves a fuel econom y increase in the vicinity of the hybridelectric gain cited here and, given “high m a nufac turing volum e s,” at similar costs.

Returning to the hybrid -electric case, our conclusions are as follows (Table 4): for purchases at the 2005 cost and under the 14-year -life/12% discount rate scenario, hybrids in Classes 3-5 would bring net cost savings ove r the life of the vehicl e. These saving s are $1583 if fue l costs $1.41 per gallon a nd $2572 at $1.60 per gallon. Using 2015 costs roughly doubles net savings. In the 3-year pa yback/8% discount rate scenario, hybrids are only cost-effectiv e starting in 2015 (when in crem ental costs of production will have dropped) and at fuel prices of $1.60. Results for Class 6 trucks are sim ilar, and we

assum e the sam e for the larger truck s

.

Table 4 Cost-Effec t iveness of Hybrid-Elec t ric Truc ks

Base mpg Fuel econom y gain Class 3- 5 9

. 2 9 3 %

Class 6 7

. 4 7 1 %

Fuel sa v i ng s

Class 3-5 At $1.41 per gallon At $1.60 per gallon Class 6 At $1.41 per gallon At $1.60 per gallon In 14 y e ars, 12 % discount rate $7,343 $8,332 In 14 y e ars, 12 % discount rate $8,578 $9,733

In 3 y e a r s, 8% di scount rate $3,242 $3,679 In 3 y e a r s, 8% di scount rate $3,772 $4,280

Net sa v i ngs at 2 005 purc h ase c o st

Class 3-5 At $1.41 per gallon At $1.60 per gallon Class 6 At $1.41 per gallon At $1.60 per gallon In 14 y e ars, 12 % discount rate $1,583 $2,572 In 14 y e ars, 12 % discount rate $1,429 $2,584

In 3 y e a r s, 8% di scount rate -$2,518 -$2,081 In 3 y e a r s, 8% di scount rate -$3,377 -$2,869

Net sa v i ngs at 2 015 purc h ase c o st

Class 3-5 At $1.41 per gallon At $1.60 per gallon Class 6 At $1.41 per gallon At $1.60 per gallon In 14 y e ars, 12 % discount rate $3,790 $4,779 In 14 y e ars, 12 % discount rate $4,488 $5,643

In 3 y e a r s, 8% di scount rate -$311 $126 In 3 y e a r s, 8% di scount rate -$318 $190

Policies to promote hybrids

The 2003 energy bill conference report contains tax credits for pur chasers of hybrids, including heavy-duty vehicles. The credit is a p e rcentage of the increm ental co st relative

to a com p arable conventional vehicle, wher e that percentage is determ ined by the hybrid’s city fuel economy advantage, as show n in Table 5. There is a cap on increm ental cost, which depends on vehicle weight.

These cred its would be availab l e as o f the da te of enactm e nt of the bill and last through 2008. Each m a nufacturer is subject to a cap on the num ber of vehicles of all types that receive cred its in this secti on of the bill, which include light duty hybrids and diesels.

12Consequently som e m a nufacturers, notably t hose that are far along in their developm ent of light-duty hybrids, m a y not be m o tivated to seek heavy-duty hybrid credits. On the other hand, the per-vehicle cr edits are potentially higher for heavy-duty vehicles, so

m a nufacturers that are in a position to offer heavy-duty hybrids will do so

.

Table 5 Energy Bill Tax Incentives for Hea vy-Duty Hy brids

Improvement in city fuel econo my 30-40% 4 0

- 5 0 % >50%

% incremental cost covered by tax credit 2 0 % 3 0 % 4 0 %

Vehicle w e ight Maximum incrementa l cost
<14,000 lbs. (Class 2b-3) $7,500
14,000-26,000 lbs. (Class 4-6) $15,000
>26,000 lbs. (Class 7&8) $30,000

Sou r ce: En er gy Po licy A c t o f 20 03 ( H .R.6 ) Co nf er en ce Rep o r t

The hybrid vehicles con s idered in th e preced i ng section would be elig ible for credits o f 40% of increm ental cost. The increm ental co sts projected in An et al. are below the

m a xim u m allowed in the energy bill. A com p aris on of Tables 3 and 5 indicates a lack of

consensus o n increm ental cos t s, and in par ticu l ar on its r e la tionshi p to vehicle size.

Table 4 shows that, while hybrids in all classe s considered are cost -effective based on a 14-year payback and 12% discount rate, they are not cost-effective in the immediate future for those dem a nding a 3-year payback and discounting at 8%. The proposed tax credits could change that pict ure: at a fuel price of $1.60 pe r gallon, the credits together with three years’ fuel savings would fully o ffset increm ental costs for Class 3-5 hybrids, and would be alm o st sufficient for C l asses 6&7 as well.

Thus the credits seem to be of about the right size to do what they are designed to do,

nam e ly to accelerate the viability of hybrid s in th e vehicle m a rket by prov iding a

tem porary subsidy to the consum er. 3 The incentives could also bring about the decline of hybrid costs with tim e predicted by An et al . Conversely, without the credits or som e other incentive, the techn o logy m a y not m a teri alize at all; the dec lin e of technology co sts with tim e assum e d in the study is prem ised on the growth in expe rience and econom ies of scale that w ould follow from near-term intr oduction of these vehicles, which the m a rket alone will not bring about.

Funding for hybrid research and developm ent is also a determ inant of the rate at which hybrids en ter the m a rket. It is no t clear th at DOE continues to be comm itted to the

3 Th e ex act credits in th e en ergy b ill, in v i ew o f th ei r v e ry sho r t lifetim e, are no t lik ely to p r od u c e su ch favora ble resul t s as disc usse d here

.

13efficiency improvem e nt goals set out in the 21 st Century Truck Roadm a p, and the FY 2005 budget request for the 21 st Century Truck P a rtners hip is 30% below the 2004 appropriation level.

Non-hybrid technologies

A suite of technologies sim ilar to those disc ussed above for tractor-trailers could also provide substantial fuel econom y benefits fo r Class 3-6 trucks. In m o st cases, these would not be applied with hybrid ization because they are better suited to a highway duty cycle, or because technologies’ cost-effectiv eness drops dram atically when they are

com b ined with hybridization (since the “base” fu el econom y for a hybrid is so high). For the 37% of Class 3-6 vehicles that are not used locally and th erefore m a y not be good candidates for hybridization, som e of conven tional efficiency technologies would be cost-effectiv e. These im provem e nts are not in cluded in our final estim ates of potential savings, however. Fuel econom y standards for such a diverse group of vehicles would be unwieldy, and no candidate policy is offered here to produce these savings.

Class 2b trucks

Class 2b trucks (8500-10000 lbs. GVW ) cons um e 360,000 barrels of oil annually (Davis 2003), m o re than any class of m e dium or heavy truck other than Class 8. A brief discussion of these vehicles is included here beca use, like the larger trucks, they are subject to no fuel economy standards a nd are therefore typ i cally excluded from discussions of passenger vehicl e efficiency im pr ovem e nts.

Fuel economy standards, feebates, and incen tives to prom ote hybridization all warrant consideration for Class 2b. This class includes a wide range of vehicl e types, but 80% are pickups (Davis and Truett 2002), which together with vans, panel trucks and sport utility vehicles m a ke up over 96% of the total. Th ese vehicles have unde r-8500-lb. counterparts, and bringing them under CAFÉ or a feebat e schem e would pose no serious technical obstacles.

Indeed, an increase in the weight limit for vehicles subject to CA FÉ, from 8500 lbs. to 10,000 lbs., has been proposed in recent bi lls considered by C ongress, and DOT has raised this possibility for consideration in its next CAFÉ rulem a king (DOT 2003). One

concern vo iced repeated ly has been that fu el econom y regulation of Class 2b would be a hardship for far m ers and others that need a vehicle in this weight range for work. These vehicle owners would benefit at leas t as m u ch as othe rs by improvem e nts in fuel

econom y, however, so long as they preserve vehicle functionality. It is nonetheless possible that som e will p r opose to ad dress th is iss u e by creating an exception for work trucks.

Over half of all vehicles in this weight range are used prim arily as personal vehicles, but it is d i f f i cult to set v e hic l e standa rds on the basis of use, rather than vehicle characteristics. EPA’s Tier 2 tailp ipe regula tions approach this pr oblem by defining work vehicles as those that have either a very la rge seating capacity or a bed of length six feet

1415 or more. 4 The emissions rules for heavy-duty vehicl es apply to these work vehicles; the remaining vehicles in Class 2b must meet the same standards as light-duty vehicles meet under Tier 2. All pickups and many vans in this weight class will qualify as work vehicles under this definition, leaving larg e SUVs as the primary Class 2b vehicles brought into the light-duty emissions regime under Tier 2. As noted above, the vast majority of Class 2b vehicles are pick-ups , so this approach would subject only a minority of new vehicles to fuel economy st andards. For those that would be subject, though, choosing a test cycle would be relativ ely straightforward, si nce these vehicles will already undergo chassis dynamometer testin g for Tier 2 compliance purposes in the near future.

Basing fuel economy standards on vehicle attributes such as size, as the Department of Transportation is now considering for light -duty vehicles, could lessen opposition to placing work vehicles under CAFE. At the same time, this approach is likely to yield lower fuel savings than bringing Class 2b vehi cles into the present fuel economy regime.

A one-third increase in fuel economy for pic kups, SUVs and vans would be feasible. The NAS CAFÉ panel found this level of improveme nt to be cost-effective for light trucks, and Class 2b trucks are by and large quite similar to their below-8500-lb. counterparts. The NAS concluded that these largest of light-duty vehicles have a higher potential for fuel economy increase than do light trucks on the whole. The 33% improvement estimate for 2bs is in this sense conservative.

Total fuel savings from higher truck fuel economy

Here we estimate fuel savings from all the fuel economy improvements found above to be cost-effective. The efficiency improvement estimates given for tractor-trailers are assumed to apply to all tractor-trailers, ev en though they are va lid only for highway vehicles. A non-negligible fracti on of tractor-trailers are driv en locally, but they tend to be older trucks. The fact that tractor-trailers travel a smalle r percentage of their miles on highways as they age may mean that cost sa vings of certain tec hnologies are slightly overstated here. Given the high discount rate ap plied to fuel savings and decline with age of miles traveled, however, this effect is small. For the small percentage of tractor-trailers that are used locally for their entire lives, th e analysis is not valid. Life-long local tractortrailers are candidates for hybridization (alt hough we do not include them in the hybrid discussion), however, which would bring even higher efficiency benefits.

For vehicles other than tractor-trailers, the a ggregate potential benef it of hybridization is associated with those that travel primaril y locally. In Classes 3-6, local vehicles are responsible for 47% of miles traveled. Among Class 7-8 vehicles that are not tractortrailers, 56% of miles are traveled by trucks that operate locally.

4 The definition of “medium duty passenger vehicle” MDPV excludes “any vehicle that (1)has a capacity of more than 12 persons total or (2) that is designed to accommodate more than 9 persons in seating rearward of the driver’s seat or (3) has a cargo box (e.g., a pick-up box or bed) or six feet or more in interior length).” Fed Reg Vol. 65, No.28, p.6750.16 Table 6 summarizes the fuel savings that w ould be achieved if each cost-effective fuel economy technology discussed above were to be adopted by the set of vehicles to which it applies. Because the fuel use of trucks is dominated by the tractor-trailers, this is the most important source of fuel savings: a 58% increase in fuel economy increase for tractor-trailers reduces total Class 3-8 fuel consumption by 24%. Hybridization of locally driven trucks in Classes 3-6 a nd straight trucks in classes 7 and 8 adds another 8%, for a total reduction of 32%.

This represents the potential reduction in new truck fuel consumption beginning in 2015. DOE’s NEMS model, for example, can be used to project the rate of improvement for the entire truck stock resulting from this level of efficiency improvement in new vehicles. But to place these gains in th e context of all highway vehicl e fuel use, note that if the Class 3-8 truck stock used 32% less oil toda y, savings would be 740,000 barrels of oil per day. In addition, if the fuel economy of Class 2b trucks were one-third higher today, their fuel consumption would be 90,000 barrels per day lower.

Table 6 Cost-Effective Fuel Savings from He avy Truck Fuel Economy Improvements Available in 2015

Class 2b 8500-10,000 lbs. Class 3-5 10,001-19,500 lbs. Class 6 19,501-26,000 lbs. Class 7-8 26,001 lbs. and
up Class 7-8 26,001 lbs. and
up
Technologies Assorted conventional Hybrid Hybrid Assorted conventional Hybrid

Policies Fuel economy standard, feebate Tax incentives and R&D for hybrids " Fuel economy and technology

standards Tax incentives and R&D for hybrids

Applicability Pickup, van, SUV Local Local tractor trailer Straight, local

Potential costeffective improvement in fuel economy 33% 93% 71% 58% 71%

Miles traveled by vehicles to which technology applies (as % of total class miles) 96% 53% 44% 85% 9%

Oil use of class (as % of all Class 3-8 oil use) 16% 5% 14% 81% 81% Total reduction of Class 3-8 oil

use

Reduction in oil use as % of all Class 3-8 truck oil

use 4% 1% 3% 25% 3% 32% (36% w/ Class 2b savings)

This discussion summarizes the benefits of all technological improvement found above to be cost-effective. What level of adoption of those technologies the proposed policies would achieve is another question. Fuel econom y standards for tracto r-trailers and Class17 2b trucks would yield a high percentage of the reductions discussed above, though the issue of rebound needs to be considered. In the case of tax credits and R&D funding to accelerate hybridization of the remaining truc ks, further analysis needs to be done to determine the extent of incentiv es and how much investment needed to bring hybrid costs down to levels associated with high volumes.18 References

(An 2000) An, Stodolsky, Vyas, Cuenca and Eber hardt, “Scenario Analysis of Hybrid Class 3-7 Heavy Vehicles,” Societ y of Automotive Engineers, March.

(Davis 2003) Davis and Diegel, Transportation Energy Data Book Edition 23 , Center for Transportation Analysis, Oak Ridge National Laboratory, October.

(Davis and Truett 2002) Davis and Truett, “Investigation of Class 2b Trucks,” ORNL/TM-2002/49, Oak Ridge National Laboratory, March.

(DOE 2000) “Technology Roadmap for the 21 st Century Truck Program,” 21CT-001, December.

(DOT 2003) National Highway Traffic Safe ty Administration Advanced Notice of Proposed Rulemaking, “Reforming the Automobile Fuel Economy Standards Program,” 49 CFR Part 533, USDOT, December.

(DuLeep 1997) DuLeep, “Keep On Truckin’ – Sustainably?” in Transportation, Energy, and Environment: How Far Can Technology Take Us? ed. DeCicco and DeLucchi, American Council for an Energy-Efficient Economy.

(NRC 2002) National Research Council, “E ffectiveness and Impact of Corporate Average Fuel Economy Standards,” Transportation Research Board.

(WestStart 2002) Hybrid Truck Users’ Forum, “Hybrid DiaLog” http://www.weststart.org/programs/ htuf/hybriddialog/Htuf-info-02-07.pdf , November.

(Sachs 1992) Sachs, DeCicco, Ledbetter, Mengelberg, “Heavy Truck Fuel Economy: A Review of Technologies and the Potential for Improvement,” American Council for an Energy-Efficient Economy, January.

(Vyas 2002) Vyas, Saricks and Stodolsky, Th e Potential Effect of Future EnergyEfficiency and Emissions-Improving Tec hnologies on Fuel Consumption of Heavy Trucks, Argonne National Lab, August.